LMS has published its latest weekly update, tracking remortgage market performance through the Covid-19 crisis.
The update includes LMS’ proprietary data on remortgage instructions, completions, cancellations and pipeline activity.
In this update, the fourth week of May refers to 18/05/20 – 22/05/20, the ‘final’ week of May refers to 25/05/20 – 29/05/20 and the ‘first’ week of June refers to 01/06/20 – 05/06/20. All comparisons to the ‘first’ week of May refer to 27/04/20 – 01/05/20.
The first week of June 2020 ran 6% higher than the average weekly instruction volumes in June 2019. The increase in instruction levels is a positive sign of overall market health improving and a return to normal. Month on month, instruction volumes were also 7.3% higher in the first week of June than in the first week of May.
Instruction volumes increased by 6.7% from the final week of May to the first week of June. For the last three weeks instruction volumes have remained steady, with less than a 10% variation between volumes.
June completion volumes have reduced from those recorded in May in line with our expectations, this is likely to be linked to seasonal ERC expiries as June is historically a quieter month.
Weekly data has demonstrated that it is typical for completion volumes to spike in the first week of each month and June has proven to be no different, but when looking at the bigger picture, completion volumes are down 30.2% compared to volumes in the first week of May.
The recent trend of rising cancellations continues with volumes increasing in the first week of June, with higher levels than for the same period in May (up 45.8%), and when compared with the average weekly number for June 2019 (up 92%). Cancellations in June so far are also 38.9% higher than the average weekly volume across all weeks in May.
Old and inactive cases are being cleared by legal teams as firms settle into Covid-19 working, and this is likely to be behind this increase.
June commences with the pipeline volume 4.2% lower than at the beginning of May, and this is reflective of the rising completion and cancellation rates throughout last month.
If instruction volumes continue to rise at lower rates than cancellations and completions, June’s pipeline will continue to contract and could potentially impact July and August, which are historically busy months.
Nick Chadbourne, CEO of LMS, said: “The first week of June marks another consistent week of healthy instruction volumes. We are seeing a continued return towards stability in this area, with a consistent increase in new cases coming onto the books. It is particularly promising to note that when making year on year comparisons between June 2019 and June 2020, we are seeing increased volumes at present.
“Increasing cancellations volumes are cause for quiet concern and something we will continue to monitor as the month continues. Rising levels could be caused by offers from Q4 2019 expiring and firms clearing out aged cases at the beginning of the month.
‘Moreover, as the Covid-19 crisis continues and borrowers’ circumstances continue to change and new deals enter the market, previously attractive offers may become unappealing. This could be having a knock-on effect as borrowers look to change deals and ensure they are getting the best available product at that time.”